February 6, 2014, 6:46 am

Realtor Bashing; They Are Very Good At Something

by: The Financial Blogger    Category: Properties
email this postEmail This Post Print This PostPrint This Post Post a CommentPost a Comment

Last week, I enjoyed a very interesting discussion with Pawel, a Real Estate Agent, after answering the famous question “Should I Get a Real Estate Agent?”.  I truly enjoyed this discussion as Pawel defended his points without saying I’m a total lunatic. I like when two people can debate without telling the other party he is a lost cause. After all this back & forth conversation, I thought I “owed” it to cover the other part of realtors’ job. While I would never take a real estate agent to sell my house, I think they are very good at something else!

 

THE OTHER HALF OF THE TRANSACTION

 

When you sell your house, this is usually 50% of a bigger transaction. Most people sell their house to buy another one. Therefore, once you sold your house, you are only always done with your transaction. The other half, probably the most important part, is to buy your new home. I think this is the most important part of the transaction since you usually make more money buying the right asset at the right time than selling it.

 

If you can buy the right house at the right price, it will be easier to make a healthy profit when you will sell it.

 

HOW CAN A REAL ESTATE AGENT TRULY HELP YOU

 

First of all, by definition, realtors are in the real estate business every day. They see what is put up for sale, what drops in price and what is being sold and the price it is being sold at. The fact they have easy access to this data is definitely a plus when you are looking to buy your new home. If you look for a house in Montreal for example, you are better off with an agent that keeps a Montreal home listing up to date like this one.

 

The agent can quickly find the type of house you are looking for and the listing you would likely waste a few hours to find on the internet by yourself. Plus, you don’t see everything on the internet. An agent will know the neighborhood better and might have already visited the house so he knows what pictures are not showing.

 

I also like the fact that he knows how long a property has been for sale and what has been sold recently. This is crucial information when you enter into negotiations. Unless you look at the Real Estate market on a weekly basis in the months prior to buying a house, you will not be able to know how long a property is being listed. The agent knows. He can also show you comparable properties that have been sold lately. There is always a difference between the price you pay and the price the house was listed at. This is why it is important to know how much the house is really worth. You can always find this information on your own, but it is more complicated and requires a lot more time.

 

Finally, the last aspect why I truly enjoy dealing with a Realtor to buy a property is the fact that he will book all your visits for you. You don’t have to do anything, he does it all. When I hunt for a house, I usually visit ten properties that fit my criteria. It helps me to see what is offered on the market and I can compare houses to make the best choice. I don’t know if you have ever tried this, but booking 10 visits with 10 different agents is quite a lot of pain. Most of them are working when you call them so you hit the voicemail 80% of the time. Then, you may be able to book 1 or 2 appointments the same day but it’s hard to have them one after the other. When you leave the agent do it for you, you can easily visit 5-6 house during the same day as you only need your agent availability to buy the house, not 10 agent’s agenda.

 

I ALMOST FORGET THE MOST IMPORTANT REASON WHY I USE A REALTOR TO BUY A PROPERTY

 

During my last article about real estate, I might have left the impression that realtors don’t do much and that you can easily put your house up for sale on your own. It is true that you can put your house up for sale without the help of a realtor but it’s not true that the guy doesn’t work. The main problem is more linked to the amount of commission you must pay to sell your property. The seller is basically paying 2 agents (the seller and the buyer), he pays also for the banner and for the office rent agents are charged monthly. This is why the 5% can hurt a lot on the sale price of your house.

 

But when you deal with a real estate agent to buy a house, there are no commissions to be paid! As I just wrote; the seller is paying for everything. As a buyer, the use of an agent is completely free. This sound like the perfect deal for me: you benefit from professional advice, get access to more data and have a private secretary to book your visits. Then, once you have bought your house, the cost of this service is a big fat ZERO.

 

This is so good that I think it’s a distortion in the market. At one point, it would even make more sense to have a seller paying a 2% or 2.5% commission fee and have the buyer paying also a finding fee to his agents. This would balance everything out and make more sense. But then again, I’m not sure I would be prepared to pay 5K-10K to an agent just to buy a house. I find their service awesome, but I would not even pay $1,000 for such support. I’m not sure there is a solution to this dilemma. In the meantime, I would still rather sell my properties myself and then use an agent for free to buy my next home.

 

What do you think? Do you use real estate agents when you buy?

Similar Posts:

You Want More? Sign-up! ->
TFB VIP Newsletter


If you liked this articles, you might want to sign for my FULL RSS FEEDS. If you prefer to receive the posts in your email, subscribe CLICK HERE


Comments

As a buyer, if you approach the seller or seller agent directly you can very easily knock out the 2.5% commission from the price. They will not even try to negotiate, knowing that if you came with your own agent they will have to pay it to him anyway.

Is paying 2.5% extra for the convenience of 10 booked appointments? I am not sure – it is a steep price!

The whole idea that the seller pays for the buyer agent is very strange. The seller is actually paying someone to work against his own interest, as the buyer agent will try to lower the transaction price.

Most buyers will follow your advice and get a ‘free’ agent when looking for a house – this setup is one of the reasons why the system is so tough to abolish.

by: The Financial Blogger | February 7th, 2014 (6:50 am)

Hello Pawel,

that’s interesting, I never though the agent would gladly cut his commission if we simply ask… very interesting! Thx for the idea!!

I agree with you, but in practice, the seller is truly paying for the buyer agent. This is how the setup is made. As most seller will use an agent to sell their property, they will take the same agent to buy their next home. Therefore, it’s a vicious circle where you always end-up paying 2.5% extra if you use agents ;-)

I’d argue the buyer actually pays the commission, since without a buyer there’s no transaction and no money to pay the realtor.